Site Mobile Navigation

Senate G.O.P. Digs In to Keep Tax Cuts

WASHINGTON — The Senate Republican leader proposed legislation on Monday to continue all of the Bush-era tax cuts indefinitely, testing the willingness of Democrats to allow a tax increase on the wealthiest Americans in a weak economy and making clear that a partisan fight will extend deep into the campaign season if not beyond.

The proposal by the Senate leader, Mitch McConnell of Kentucky, came a day after the House Republican leader, John A. Boehner of Ohio, suggested a potential compromise, saying he would vote for President Obama’s plan to extend the cuts only for households earning less than $250,000 if he had no other choice.

In part, Mr. McConnell’s proposal illustrated the greater leverage that Republicans enjoy in the Senate, where they control 41 seats — enough to filibuster and block any bill. While Mr. Boehner cannot stop House Democrats from forcing a vote on the president’s favored tax plan, Mr. McConnell made clear that he would have a say and that he wanted to put a handful of wavering Senate Democrats on the spot.

But Mr. McConnell’s position also served as a political counterweight to Mr. Boehner’s statement on Sunday, which suggested that some Republicans wanted to avoid a brawl in which they would be cast as blocking tax relief for the middle class to ensure that tax cuts continued for the wealthy. Senate Republicans, by contrast, seem to relish the fight.

Democrats immediately dismissed Mr. McConnell’s plan, noting that he had not offered any way to make up the $700 billion in lost revenue over 10 years that extending the tax breaks at the highest income levels would cost the government.

The White House suggested that Republicans were in disarray and at war with each other.

And President Obama, at a town-hall-style meeting in Fairfax, Va., said that rich households would still benefit from his plan, with lower taxes on their first $250,000 income, but that Republicans stood in the way.

“We could get that done this week,” he said. “But we’re still in this wrestling match with John Boehner and Mitch McConnell.”

In a forceful floor speech that could serve as a closing statement in his election-year pitch for returning Republicans to power, Mr. McConnell accused the White House and Democrats in Congress of using their one-party control of Washington over the last two years to run up spending and now wanting to raise taxes to spend more.

“Democrats spent the last two years putting government in charge of health care, the financial sector, car companies, insurance companies, student loans — you name it,” Mr. McConnell said in his speech, as the Senate resumed work after a five-week recess. “Now they want the tax hike to pay for it all.”

Mr. McConnell moved quickly to exploit the discord among Democrats who disagree internally about how to handle the expiring tax cuts given the sluggish economy. He noted that five members of the Senate Democratic caucus had said they favored continuing all of the tax cuts, at least temporarily, putting them at odds with Mr. Obama.

One of them, Joseph I. Lieberman, the Connecticut independent who caucuses with the Democrats, called on Monday for extending the cuts at all income levels, for a year. “I don’t think it makes sense to raise any federal taxes during the uncertain economy we are struggling through,” Mr. Lieberman said in a speech to the Chamber of Commerce in Middlesex, Conn.

Photo

Senator Ben Nelson, Democrat of Nebraska, said he would not vote for a bill that included a partial extension of the tax cuts.Credit
Drew Angerer/The New York Times

“The more money we leave in private hands, the quicker our economic recovery will be,” he said. “And that means I will do everything I can to make sure Congress extends the so-called Bush tax cuts for another year.”

At the Capitol later in the day, Mr. Lieberman said he would not block a bill that continued the tax breaks only at the lower levels.

But Senator Ben Nelson, Democrat of Nebraska, refused to make a similar commitment, saying he did not expect his party leaders to force a vote only on Mr. Obama’s preferred plan. But he said he would not vote for a bill that included only a partial extension. “It would be very hard for me to support that,” he said.

An error has occurred. Please try again later.

You are already subscribed to this email.

In a statement last week Mr. Nelson said he did not want any tax increases until the economy improved. “I support extending all of the expiring tax cuts until Nebraska’s and the nation’s economy is in better shape, and perhaps longer, because raising taxes in a weak economy could impair recovery,” he said.

Democrats, however, were not alone in dealing with internal disagreements. It was clear that Mr. Boehner’s willingness to vote for the president’s plan did not mark a broader shift among his fellow House Republicans.

Representatives Eric Cantor of Virginia and Mike Pence of Indiana, the No. 2 and 3 House Republicans, respectively, have both said they wanted the tax breaks continued for everyone but pointedly declined on Monday to join Mr. Boehner’s pledge to vote for a partial extension just for the middle class.

There were also signs that Senate Democratic leaders were not yet prepared to begin the tax cut debate. The majority leader, Harry Reid of Nevada, told colleagues that next week he would bring to the floor the annual Pentagon authorization bill, which includes a provision allowing the repeal of the “don’t ask, don’t policy” on gay and lesbian soldiers.

The Senate is expected to be in session for just four weeks before lawmakers return home to campaign full time, and the Pentagon measure normally requires two or three weeks of floor debate. But even just starting the floor debate, however, would show liberal advocates that Democrats were serious about repealing “don’t ask, don’t tell.”

Senator John McCain of Arizona, the senior Republican on the Armed Services Committee, said he would try to block the Pentagon measure because he said the White House was moving to repeal “don’t ask, don’t tell” without properly gauging the impact on battle readiness and troop morale.

Mr. McCain said that he did not believe there was time to complete the bill and that Democrats had other motivations. “Everything that’s done around here is done for political reasons,” he said. “And Harry Reid does everything for political reasons.”

Democrats need time to draft the tax bill, and also line up their votes. In addition, Mr. McConnell’s stance increases the likelihood that the tax fight could be drawn out, and Democrats have other crucial work to do before the sessions ends, including a temporary spending measure to finance the government until after the election.

The tax cuts, approved in 2001 and 2003, were written to expire at the end of this year at all income levels.

A version of this article appears in print on September 14, 2010, on Page A1 of the New York edition with the headline: In Senate, G.O.P. Digs In to Keep Bush Tax Cuts. Order Reprints|Today's Paper|Subscribe